Name
Global FinTech Guide
Country _ Name
Finland
SectionTitle
Trading platforms/social trading platforms/signal following
Body
FinTechs belonging to this category operate trading platforms or online marketplaces for investment opportunities or certain financial contracts – e.g. securities, factoring etc. and sometimes furthermore provide contact to financial experts and tools for the decision-making.

FinTech-signalling and social trading platforms provide users with the opportunity to exchange opinions on financial investments and offer signal providers and traders the possibility to make their securities portfolio publicly visible. This way the portfolios can be linked to and followed by other traders via the platform automatically, so that the trading and investment strategy of the followed traders can be copied.

The platform often cooperates with a financial services provider or a credit institution where both the trader and the follower hold their securities accounts, and which execute the orders both of the trader and the follower and to which the platform passes on the trading decisions.

Introduction

Attitude of the country towards trading, social trading or signalling platforms

Finland generally has a permissive attitude towards trading, social trading, and signaling platforms, provided they comply with the regulatory requirements. Services that execute trades automatically based on specific signals, including those triggered by another client's investment decisions (with permission), are recognised as a form of portfolio management. This applies whether managed by a person or an algorithm. FIN-FSA recognises the European Securities Markets Authority’s (ESMA) supervisory guidance on "copy trading" services, indicating regulatory oversight is focused on ensuring compliance with existing financial service laws and EU regulation, rather than imposing additional restrictions on these platforms.


Legal affairs

Obligations and requirements to provide trading, social trading or signalling platforms described above

Finland generally has a permissive attitude towards trading, social trading, and signaling platforms, provided they comply with the regulatory requirements. Services that execute trades automatically based on specific signals, including those triggered by another client's investment decisions (with permission), are recognised as a form of portfolio management. This applies whether managed by a person or an algorithm. FIN-FSA recognises the European Securities Markets Authority’s (ESMA) supervisory guidance on "copy trading" services, indicating regulatory oversight is focused on ensuring compliance with existing financial service laws and EU regulation, rather than imposing additional restrictions on these platforms.

Additional comments regarding the legal situation for trading, social trading or signalling platforms or what FinTech’s must be aware of in this business area

Trading, social trading or signalling platforms fall under the category of the provision of investment services for regulatory and supervisory purposes. To provide such services in Finland, entities must comply with regulatory requirements under the Investment Services Act (ISA). They need to obtain authorisation from the Financial Supervisory Authority (FIN-FSA), demonstrating they meet several prerequisites.

Key Requirements for Authorisation

  • Authorisation Application: Firms must apply for specific investment and ancillary services as outlined in the ISA. Before applying, they must submit a business plan detailing anticipated activities, investment services, organisational structure, and key personnel’s experience to the FIN-FSA’s registry.
Organisational and Personnel Requirements:

  • The entity must have at least one permanent place of business in Finland.
  • Management must include at least two individuals with sufficient expertise and experience in financial services.
  • Management must comply with fit and proper requirements and demonstrate knowledge of key risks and investment activities.
  • The entity must establish robust internal controls, including compliance, risk management, and internal audit functions.
Financial Requirements:

  • The initial capital of an investment firm is EUR 750,000, EUR 150,000 or EUR 75,000 depending on the investment services and investment activities covered by its authorisation. More detailed provisions on the initial capital are laid down in chapter 6 of the ISA.
  • The Investment Firms Regulation sets the minimum prudential capital requirements for investment firms, which must be met by all applicants for authorisation.
  • Initial capital requirements vary from EUR 75,000 to EUR 750,000, depending on the nature of the investment services.
  • The Investment Firms Regulation sets minimum prudential capital requirements for all applicants.
Internal Governance and Risk Management:

  • The ISA mandates that entities organise their activities reliably, ensuring effective risk management, internal controls, and business continuity.
  • Detailed internal policies and procedures must cover client categorisation, disclosure obligations, and marketing conduct.
Client Protection and Regulatory Compliance:

  • To safeguard investors’ assets, firms must be members of the Investors’ Compensation Fund.
  • Adherence to anti-money laundering (AML) regulations, including sufficient KYC procedures, is required.
  • Firms must have systems to detect and report suspicious transactions and accurately report transaction details to competent authorities as per MiFIR requirements.
Overall, trading, social trading, and signaling platform providers must operate with high levels of transparency and integrity, ensuring robust investor protection in the Finnish market.


Economic conditions

Market size for trading, social trading or signalling platforms and biggest companies in this business area

N/A.

Additional comments regarding the economic situation for trading, social trading or signalling platforms or what FinTech’s must be aware of in this business area

N/A.



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